(The following statement was released by the rating agency)
Apr 25 - Fitch Ratings has assigned ITNL Offshore Pte. Ltd.'s (IOPL) CNY630m bonds a final
rating of 'BBB-'.
The bond's rating is linked to the rating of Export Import Bank of India (EXIM,
'BBB-'/Stable), which has provided an unconditional and irrevocable guarantee of
up to USD114m. The rating is also supported by a debt service reserve account
(DSRA) amounting to one semi- annual coupon payment and by a principal account
The guarantee, provided by EXIM, is available to both the bond investor and the
swap provider on a pari passu basis. The latter swaps the CNY proceeds into USD.
The DSRA will be available exclusively to the bond investor, while the principal
account will be available on a pari passu basis to both the bond investor and
the swap provider.
To mitigate the foreign exchange risk of the debt obligation in CNY while the
guarantee payment is in USD, IOPL has entered into a swap agreement with
Deutsche Bank AG ('A+'/Stable). In the event of the termination of the swap
before maturity, USD118m, comprising the USD114m guarantee from EXIM and the
USD4m in the principal account, is expected to be sufficient to meet bondholder
payments as well as payments that may be due to the swap provider as termination
value, even under severe adverse movements in interest rates and the CNY-USD
Further, the transaction benefits from a monitoring mechanism, under which the
sum of the bond's USD guarantee and the balance in the principal account,
adjusted for the notional mark to market value of the swaps (collectively
adjusted value), is monitored monthly. If the adjusted value falls below an
amount equivalent to 103% of the bond principal and one semi-annual interest
coupon in USD terms, IOPL will cash collateralise the charged principal account,
within three business days, to bring the adjusted value to 108% of the bond
principal and one semi-annual coupon in USD terms.
IOPL is 100%-owned by its sponsor IL&FS Transportation Networks Limited (ITNL).
ITNL has entered into a keepwell agreement with IOPL, under which ITNL will, in
the event that IOPL does not have sufficient cash or other liquid assets to meet
any of its obligations, indebtedness, liabilities, costs, expenses or other
payment obligations, endeavour to make available to IOPL funds sufficient to
meet such payment obligations in full. However, this is not a guarantee by the
sponsor in favour of the issuer. The rating of the bonds to be issued by IOPL is
linked to the guarantee by EXIM and the aforementioned features of the